Homebuying is exciting and emotional, so apply logic and financial sense to the process.
10 Money Strategies for Buying Your First Home
A house is the biggest purchase most people ever make. With so much money on the line and no experience with how the process works, regrets may happen.
Some of the top things new homeowners wish they’d done differently include going over budget and not setting aside enough cash reserves for the first year in the house.
Rather than make those mistakes, try the following 10 money strategies.
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1. Start by researching homebuying and homeownership.
Research can help better position you financially as well as guide smart financial decisions. Consider your lifestyle, changing needs over the next few years, commute, job prospects, and affordability.
By research, though, we don’t mean binge-watching “House Hunters” on HGTV. Instead, use online resources with insights about home prices and market activity, neighborhoods, schools and crime statistics. Sites include Zillow, Redfin, Trulia, Realtor.com, GreatSchools.org, and Google Maps.
Other sites focus on the financial and maintenance responsibilities of homeownership. For example, HUD shares tips on buying a home.  The Consumer Financial Protection Bureau tells you what’s involved in owning a home.  Even the Federal Trade Commission has an in-depth guide on how to shop for a mortgage. 
2. Get your budget ready for homeownership.
Now is the time to update your budget with homeownership costs. That means your category for “rent” will be replaced with “mortgage payment.” You’ll need to swap “renters insurance” for “homeowners insurance.”
There may be more utilities to list on your budget than when you were renting and the landlord covered things like trash and water. Property tax is a big new expense category to add to your budget.
Other new budget items include home maintenance and repairs. If you want a yard or swimming pool, then you’ll need to add the gardener or pool technician to the budget. If you’re considering a home in a Homeowners Association (HOA) or you see the area has extra property tax assessments, include these costs.
After crunching these numbers, you may realize you need to save more money or lower your price point.
3. Save up as much money as possible.
You’ll most likely need even more money for a down payment, closing costs, and monthly expenses than you first thought.
You should put money aside for other aspects of your life, too. Create a house savings fund, emergency fund, or retirement fund. To save as much money as possible, free up money by paying down debt.
Saving this money may take time, so set a timeline for your home purchase that takes a saving strategy into account. Getting your first home will be worth the wait if you know you’ll be in a solid, sustainable financial position.
4. Look at a lot of homes. Don’t rush to buy.
Spend considerable time on the home search. You want to make sure you find one that’s properly priced and fits as many of your criteria as possible.
Buying a home too quickly has many pitfalls. Many people who bought too soon say they paid more than they should have because they didn’t think it through fully. Others say they lost money due to unforeseen repairs. You don’t want your first home to be a money pit.
Step back and consider many types of homes, locations, and neighborhoods. It gives you a better picture of what’s available and what works for you.
5. Be realistic about what you can afford rather than focus on what you want.
You may have a long wish list for your first home. But, many of those things probably should wait for the future when your income and financial situation fit those desires. Until then, buy based on what you can afford now.
Typically, you should ensure your monthly housing costs (mortgage, taxes, insurance, and fees) only take 25 percent of your monthly income. Also, think about the down payment you plan to make. Use an online mortgage calculator to enter all these factors and find out what’s affordable.
Think about trade-offs. You could buy a home that has many features you want but that also needs renovation. While the price of the house may be right, the cost of upgrading may not be. Instead, consider a smaller house with fewer amenities that won’t need more work.
6. Don’t get emotional about a house.
People often make their biggest money mistakes when they let emotions dictate what they do. Sure, you might love that house with the dream kitchen or backyard oasis. But, it may not be financially wise to max out your monthly expenses just to get it.
Look at it a little more like a business. A house is your sanctuary. But, it’s still just a building or space you’re investing in and hoping to get a return on. You can create that dream kitchen or backyard oasis in a home that makes better financial sense down the road.
7. Do a home inspection.
Saving money is the right strategy except when it ends up costing you more money. Home inspections are optional, but most realtors will tell you to do it anyway. A home inspection helps you learn more about the home you’re under contract to buy.
In the long run, spending money on a home inspection may actually save money. These inspections often reveal hidden costs. You can ask the seller to make repairs, but they don’t always have to. Then it’s up to you to decide if you still want to proceed. In most cases you can get your deposit back if you change your mind.
8. Shop around for a mortgage.
Many people are happy just to be approved for a mortgage loan. But, don’t assume your first approval, rates, and closing costs represent what all banks and lenders will offer you. It may not be the best mortgage for your needs.
Instead, use a mortgage broker or online mortgage marketplace to get a range of mortgage offers. Some lenders may have loan products better suited to your income and lifestyle. This includes jumbo loans with lower down payments or mortgages made for self-employed homebuyers.
9. Avoid risky loan products.
It’s good that many loan products help home buyers with unique situations. But, some mortgages may be risky. Make sure you fully understand how variable interest rates affect loans. If you have one of those you can end up with skyrocketing monthly payments later on. Don’t end up in a position where you can no longer afford your home.
Be wary of cheap mortgages or loan products that seem too good to be true. They probably are! Read all the small print and research the company behind the loan before signing up.
10. Wait on big projects.
Once you get your keys to that first home and it’s yours to do with whatever you like, take a moment to reflect and enjoy. Don’t race down to the nearest home improvement store or hire a contractor.
Live in the house for awhile. Get adjusted to the new monthly budget and see if big projects are truly needed or feasible. Then, you can weigh the costs and return on investment more logically.
11. Welcome Home!
Buying your first home is thrilling. It’s a mixture of excitement, pride, and fear. But, if you use the right money strategies, you’ll navigate home buying without wasting money. Better yet, you’ll avoid unneeded financial pressure that can spoil this life-changing experience.
Published by Debt.com, LLC